French bank Societe Generale said Thursday it returned to a loss in the first quarter after the further devaluation of assets linked to U.S. real estate caused it to take nearly ¤2 billion ($2.7 billion) in new writedowns and provisions, according to AP. Paris-based Societe Generale, which had struggled to return to profitability last year after losing billions of euros in a massive trading scandal, reported a net loss of ¤278 million in the first quarter, down from a ¤1.1 billion profit a year earlier. The bank, whose chairman announced his resignation last week, blamed the downturn in the U.S. real estate market, ratings downgrades of bond insurers, and what it called its own «tighter valuation assumptions» for ¤1.5 billion in new losses and writedowns in its investment banking division. Investors dumped the company's shares, and at midday the stock was down 4.3 percent at ¤41.88. Societe Generale's loss comes in stark contrast to larger French rival BNP Paribas, which Wednesday reported a quarterly profit of ¤1.56 billion. In a statement, it forecast that the global economic recession would continue to weigh on banks' performance this year and said «Societe Generale will not be immune from this trend.» Speaking at a news conference at the bank's headquarters near Paris, CEO Frederic Oudea declined to explain why the financial crisis had hurt Societe Generale so much more than rivals like BNP Paribas in the first quarter. «I haven' studied BNP's results line-by-line, but I believe they also took some depreciations,» Oudea said, «I can't comment beyond that.» The bank's loss also contrasted with reassuring comments from the CEO over the first three months of the year. Presenting the 2008 results in February, Oudea said «Overall when I see how we entered 2009, I think we are in good shape in relative terms compared with our peers.» In its statement, Societe Generale predicted its cost of risk will remain high this year and didn't rule out additional writedowns, although those taken in the first quarter «already reflect the current deterioration in the U.S. real estate market and monoline (bond) insurer counterparties.» Societe Generale shares fell 18 percent during the first quarter, but have jumped 45 percent since then as stock markets have rebounded globally on hopes that the worst of the financial crisis is over. The bank also said it has decided to participate in the second round of the French government's plan to recapitalize the country's banks. Societe Generale received ¤1.7 billion in the first round last December, when France pumped a total of ¤10.5 billion into six of the country's largest lenders. The investment banking division reported a loss of ¤414 million, down from earnings of ¤141 million a year ago, while sales slumped 46 percent to ¤841 million. The bank's domestic retail banking business saw earnings slump 29 percent to ¤216 million, on a 1 percent slide in revenue to ¤1.73 billion.
